According to INEGI (the national statistics office), Mexico's
index of leading economic indicators rose 0.7% in December.
That followed increases of 1.3% in October and 1.1% in
November. The index has now risen for seven straight months,
although it has still not recouped all of its losses since peaking
in mid-2008. According to INEGI, the increase in December
stemmed primarily from favorable trends in the value of the peso,
global oil prices, stock prices, manufacturing work hours, and
interest rates. The only negative indicator in December was a
decline in construction output.
Comment: The long string of
increases in the leading index is additional evidence that the
Mexican economy is in a sustained rebound. That should be no
surprise, given that the economy is heavily dependent on demand
from the United States. With the U.S. economy now in
recovery, as evidenced by a surge of inventory rebuilding, Mexico
is likely to keep growing well for a while yet. If the U.S.
economic recovery continues to broaden, the Mexican recovery will
likely continue to strengthen as well.
Patrick Fearon, CFA
Vice President, Fund Management